Top down analysis

Top Down Analysis

Top Down Analysis

1. Label all charts starting from monthly till H1. Label full chart of monthly, then label only the last leg of monthly on weekl y,

label last leg of weekly on daily, last leg of daily on h4 and last leg of h4 on h1/15 mins .

2. Check for divergences between last two impulses on all time frames

3. Fib the latest impulsive wave, in these time frames, if the impulse is the potential wave 1 or wave 3.

4. Count the corrective waves when it forms after the wave you just fibbed . Corrective waves should be at least 3 waves,

if yes then

5. Check for the completion of corrective structure – for regular flat, zigzag and expanding flat the structure completes

when wave C crosses the end of wave A. In the picture below the structure is completed when the green line is

broken.

6. After you see structure completion, note the time frame to which the structure belongs - how to know this ?

The structure belongs to the highest time frame on which you see the same structure you are tracking.

Trendline

broken

Last fractal of

lowest degree in

this chart

Divergence

Top Down Analysis

8. Set ups are to be found in lower time frame, 15 minutes or 1 hour time frame.

Higher time frame

Lower time frame

Top Down Analysis

(4)

(3)

(4)

After labeling your waves, if the current wave is corrective

(wave 2 or wave 4 ), label the corrective wave to see if it’s a

zigzag or any other corrective pattern and if it is in the last leg of

the corrective pattern like leg C in red in the figure below.

If this C is on H4 or

higher time frame, go to

a lower time frame to

analyze completion of

this wave

Label subwaves of

wave C.

7. When the last wave of corrective pattern reaches the fib level you are waiting for

(as per the fib ratio given in the table in the Fibonacci lesson), move to the lower time

frame .

10. Fib the impulse down and wait for corrective pattern to complete or touch the

expected fib level 61% or 38%.

Lower time frame

Top Down Analysis

9. Wait for a new impulse down which goes below the last swing low on the same time

frame

(4)

Fib the first new

impulse down.

0.0

100.0

Last swing low

first new impulse down.

61.8

(4)

Corrective

pattern.

0.0

100.

Sell entry here (strategy

no. 4). You can apply

other strategies too as

shown in the strategies

section

61.8

In the next lesson you will learn how to find trade set ups after the Top down Analysis

Images